SaskaBroke: The Demonization of Public Service and Where All That Money Really Came From

We can all agree on one thing, so let’s start there: Saskatchewan is broke.

Okay, two things – we all know resource revenues are low. Oil prices plunged two years ago, in January 2015, and have stayed low ever since. The potash market is stagnant.

But this notion, peddled by the Saskatchewan government, that our province’s empty bank account is a result of those reduced resource revenues?

Absolute garbage.

What’s even worse is the cowardly demonization of the public service as a decoy for their undisciplined, reckless and, frankly, amateurish approach to managing (or not) Saskatchewan’s books.

See, over the last few weeks I’ve spent my spare time (namely those precious hours between when I wake up at 5am and when my kids wake up for school), deep-diving into Saskatchewan’s Public Accounts.

As you know, every spring the Saskatchewan government presents us with The Budget.

Budget Day is kind of like Christmas in the Legislature – everyone gets dressed up, and piles of visitors (most of whom detest each other) descend on the building to eat cake, watch people fight, and then sneak off to drink in Uncle Ken’s office.

The Budget document is the Christmas meal, presented with love by Mom, or in this case, the Finance Minister. It looks good and tastes great.

Public Accounts are what you get after eating that Christmas meal, digesting it, and…well, you get the picture.

Every year, in three massive Public Accounts Volumes, the government reports what they actually earned, and actually spent, the year before.

It should come as no surprise that Public Accounts never, ever looks like The Budget. In fact, you’ve probably never heard of Public Accounts, because it reports the unvarnished truth, and no government is going to give you that with any fanfare.

2017 Budget Day is March 22nd, and Finance Minister Doherty and Premier Brad Wall are enthusiastically getting us all ready by handing out Vaseline and telling us to bend over.

“Everything is on the table,” they insist, over and over and over, lest any one of us think we are safe.

To be clear, the SaskParty are masters of messaging – of floating ominous trial balloons and lowering our expectations, just so they can exceed them.

The best example of this is probably Wall’s 2015 threat to cut back Municipal Revenue Sharing, which sent City and Town Councils into a tizzy. It never happened, and was probably never going to, but the threat sure set up a bunch of people to be really, really happy when they didn’t get screwed after all.

This time though, it’s different. After presenting a Budget in June 2016 with an operating (or General Revenue Fund) debt of approximately $400 million, the mid-year financial report released six months later, in November 2016, had that debt up to $1 billion.

Now, being in debt isn’t new in Saskatchewan – we’ve been billions of dollars in Summary debt for decades. It’s not even unreasonable, for things like infrastructure, any more than it’s unreasonable for you and I to take out a mortgage to buy a house.

What’s the difference between the operating/General Revenue Fund (GRF) Budget and the Summary Budget? And if we’ve been in debt for thirty years, why is it suddenly a big deal now?

Start by considering the provincial General Revenue Fund (GRF) budget the same as your household budget. Every month you measure your earnings against what you have to pay to keep a roof over your head, wheels in your driveway, lights on and food on your table. Some months are going to be better than others, but overall you keep the bills paid so you and your family can function happily.

A Summary budget is what happens when you take all of your earnings and expenses, and then factor in the outstanding mortgage on your house, your line of credit and your credit cards. Maybe you have a business, or even two or three, that carry debt, so that would get thrown into your Summary budget too.

Clearly those are two very different financial pictures.

Your General budget is likely fairly balanced, even if you have to put the cable bill on your credit card once in a while.

Unless you own your home, your Summary budget is probably not as rosy. In fact, on paper you’re probably a few hundred thousand dollars in debt (though hopefully that debt is offset by the value of your home and other assets, which isn’t necessarily the case for the province).

Fast forward to today – the Summary budget has ran a multi-billion dollar deficit for years, but now the GRF budget is in deficit too.

In other words, these days Saskatchewan is not even earning enough to keep its lights on.

This brings us back to the government’s demonization of the public service and handwringing over lower resource revenues.

To deflect our attention away from the real problem, Saskatchewan Finance Minister Kevin Doherty has suggested that instead of rolling back wages, he would instead treat government employees to one unpaid day off per month.

The premise being, of course, that Saskatchewan’s cash problems are thanks to a public service that is a gluttonous, lazy, overpaid pit.

That, coupled with this message,

…paints a picture of money problems that are out of the innocent hands of the victimized-by-the-economy Saskatchewan government.

That’s BULLSHIT.

But don’t take my word for it. Let’s look at the numbers, shall we?

Looking at the trends in Chart 1.0, we see that resource revenues have ebbed and flowed. The huge spike in resources in 2009 was thanks to record-high potash prices. Otherwise, with the exception of 2010 and 2016, resource revenues have stayed relatively constant, with potash increases often offsetting any reduction in oil, or vice versa.

But look closer at 2010, when resource revenues were down to $1.9 billion (which isn’t much more than today): taxation revenue went way up (almost $1 billion) and we were able to withdraw a record $1.25 billion out of Saskatchewan Crown Corps, keeping our GRF on an even keel.

Fast forward to 2016, and we see almost the exact same ratio of taxation revenue to resource revenue as we did in 2010. What we don’t see in 2016, however, is an extra half a billion dollars snagged out of the Crown Corporations.

You also don’t see (because it’s recorded as ‘Other’) the withdrawals from the Growth & Financial Security (aka “rainy day”) Fund (GFSF).

I’m not going to get into the contentious politics behind the GFSF, and whether or not it was ever a valid account, because this piece is too long already. The bottom line is that regardless of how it got there, there was $1.6 billion cash in that account in 2007, and now it’s empty.

Since 2007, we steadily transferred cash out of the GFSF to pay the province’s bills when general revenues just weren’t going to cut it. Now that well is dry.

Chart 2.0 also reflects the steady increase of general and Crown Corp debt on a Summary basis (remember, that’s like your financial profile including your mortgage and credit cards).

Crown Corporation debt is double what it was ten years ago.

Significant, because in 2010, the provincial government helped themselves to a big chunk of cash from the Crowns, which offset low resource revenue.

Thanks to an economic downturn coupled with that massive crown debt, it would appear that isn’t an option any more.

Which brings us back to reducing government employees’ salaries and output by one day per month, or 5%. It has been a wildly successful diversionary tactic, moving the public narrative away from scrutiny of government spending, and onto whether public service employees should have to suffer financially because resource workers and the government are doing the same.

Spending, though, is exactly where we should be looking.

Chart 3.0 is a snapshot of Saskatchewan government’s spending since 2007. Please note that it does not include all Ministries and agencies – I focused on the biggies, and I’m confident it is an accurate reflection of our major spending priorities.

Since 2007, education, healthcare and municipal revenue sharing via government relations have seen huge spending increases, which would be fabulous if they were sustainable – and please, let’s not talk about capital investments, given the state of some of our hospitals, lack of rural service-providers and rundown, overcrowded or rent-to-own (P3) schools.

Yes, we’ve enjoyed some serious highway improvements, and have a brand new stadium and Children’s Hospital, but we’ve also bought enough new vehicles to fill that stadium, and lost spent a billion dollars on a carbon tax carbon capture and storage. There’s more, but I’ll examine specific expenditures by Ministry in a future post.

As for public service salaries,

Healthcare workers and teachers are not paid directly by the government, therefore aren’t included in 4.0. That also means it’s highly unlikely, if not illegal, for the government to try and force this one-day unpaid scenario on those sectors.

Therefore, the award for highest government-paid salaries goes to Corrections and then Social Services, meaning the biggest impact of a 5% reduction in public service workers would be on jail guards and social workers – what could possibly go wrong?

I mean, the best way to curb drone-drug-smuggling (which is super common and has been happening way more than either the federal or provincial government will admit) into a provincial corrections centre is less guards, obviously*.

And everyone knows that Saskatchewan social workers aren’t overwhelmed at all**.

Interesting that jail guards and social workers would be the target, since Executive Council (ie. the Premiers’ Office, government spin doctors communications, political appointees) have seen one of the biggest increases in salary expenditures, and has the highest ratio of salaries to overall expenditures.

The Big 3 Crown Corporation salaries have also gone up, but nothing on par with the likes of Executive Council (though SaskTel directors and executive management have done well over the last decade):

Is Saskatchewan’s public service bloated? Probably.

But whose fault is that?

This was supposed to be a conservative-leaning government focused on reducing its own footprint, so if what they’re trying to tell us is their government has gotten too big, I feel duped.

Regardless, I can’t consider the way the Saskatchewan government has handled the prospect of streamlining public service – or even this deficit – credible, because all they’ve demonstrated so far is that they’re primarily interested in brazenly protecting their political tails by dividing and confusing the narrative, instead of even pretending to consider well-planned or strategic spending decisions.

What I know for sure that the mess we’re in is not just about reduced resource and taxation revenue (the latter of which has been at a record high, thanks in part to both increased population numbers and a run of successful years in agriculture).

No, the financial dumpster fire we’re fighting has everything to do with the fact that this government has jacked up spending – even with the best of intentions – to unsustainable levels, and has simultaneously ran out of money trees, aka the GFSF and the Crown Corporations, to continue to fund their spending habits.

And they don’t want us to talk about it – which means that we’d better start, right now.

For those of you who care, I’m Tammy Robert. I’m a writer, but pay the bills specializing in media and public relations. Email me anytime at tammyrobert@live.ca

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*Sarcasm.

**Also sarcasm.